The focus in February was on the quarterly reports for my remaining holdings which did not report in January. I love this time of the year as most dividend hikes and payments are announced in this period. But there was something else that made the headlines this month; COVID-19 (or the Corona-virus). February started out great, but when the longer-term effects on the economy became clearer the stock market was suddenly reminded that there is risk involved when investing in stocks. My portfolio took a hit during the “Corona-week” and lost over 100.000 NOK in value and is now down 3.2% year to date.

I’ll not dwell much more about this topic in this report, since it is well covered elsewhere, but I believe that the decline in the stock market last week should act as a reminder and a chance to learn more about yourself as an investor.

Are we heading into a storm?

If an investor is starting to panic when the market declines a little over 10% the investor’s risk tolerance is not in line with investing in the stock market, the portfolio is to heavily leveraged or the amount of experience does not match the holdings in your portfolio. Harsh words, but the reality is that most investors is not suited for investing in individual stocks and are better of purchasing index funds. For an investor the most important organ is not the brain, but the stomach!

Inexperience will cause you to doubt yourself and your decisions, and that is why I strongly recommend that you stick to your investment strategy instead of follow the headlines in the financial press! If you do not have a defined investment strategy you have to do your homework and start defining who you are in the stock market.

Here you can find more information about my strategy: Part 1 – The Investment Strategy

I do not focus so much on the panic in the media, but I try to exploit the increased uncertainty by increasing my positions in companies on my watchlist and adding to my holdings. Will the stock market continue to decline? I don’t know and anyone that claims they know should be disregarded as false prophets. What I do know is that I will keep purchasing high-quality companies with increasing earnings, profitability and dividends. In the long run I believe that the stock market is the best vehicle for highest value creation over time.

See comments at the end for transactions made in February.

Dividends in February:

Since all my holdings has reported at the end of February I can now review my organic dividend growth for the year. Organic dividend growth for the portfolio is the sum of changes in announced dividends multiplied with the holding’s share in the portfolio. Five companies did not announce a dividend increase, where of three was unexpected (UPM-Kymmene, Mowi and Cloetta), while Wartsila and Transalta did not change as expected. Currently the organic dividend growth is 8.7 %.

The dividends in February was paid out by Transalta Renewables, AbbVie, Aker BP and Equinor. Total dividends received was NOK 1.628, up from NOK 911 last year (increase of 79%). This is partly due to increases in company dividends, but the largest effect is due to higher yielding stocks paying out dividends in February compared to last year and a favourable USD / NOK. Currently I’m on track to receive NOK 31.000 in dividends this year, but as I keep adding cash into my portfolio and buying more assets this amount will increase.

Dividends per month increases year over year

Investment Journal:

Transactions in 2020

I sold Elkem ASA at an average price of NOK 23 per share since I wanted to reduce my exposure to cyclical businesses with a high exposure to China. They also announced a dividend cut of 76% and my patience with the company had worn out.

Lerøy Seafood was sold at NOK 62 following a good report, but the company has the highest costs per produced kilo in the industry and I already own Bakkafrost and Mowi, which in my opinion is of a higher quality than Lerøy.

Slide from Pareto Equity Research


Two companies within the MedTech-sector was included this month. I also bought more in eight companies already in my portfolio during the “Corona-week”.


The company reported a solid Q4, but their guidance for 2020 was weak (i.e. Corona) and there was a lot of insider selling this month. I therefore initiated a position in the company.

Read my short write-up here: Vitrolife – profitable growth, but skyhigh valuation


Bilderesultat for medistim

About the company:  The company develops, produces, services, leases, and distributes medical devices for cardio-vascular surgery in the United States, Europe, Asia, and internationally. It operates through three segments: Lease of Equipment, Capital and Consumable Sales, and Distribution and Sales of Third Party Products.

The company will benefit from an ageing population, since most cardiac surgeries are performed on the elderly population, but they will also benefit from lifestyle changes that translate into higher rates of the conditions of overweight and obesity.

Bilderesultat for medistim

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It goes without saying that the world tomorrow will not be the same as the world yesterday. Changes happen constantly, and the changes may be of a temporary character, but others are so powerful that they will result in changes for the society on a fundamental level.

I have written a short article describing 7 Megatrends and presents 20 Nordic companies which will benefit from these seven megatrends.

Enter your email on my subscription list and receive a free copy of the PDF (link enclosed in welcome message). I will not bombard you with emails but send you regular updates once a month with past write-ups, dividend income updates and other articles on my blog.

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This company is not what you would expect to find in my portfolio, nevertheless I bought a small holding in the company following a write-up by Focused Compunding and Vetle Forsland. I bought into the company at 3.05 NOK per share, subsequent to the company distributing a dividend of 4 NOK per share.

A little summary of what has happened in Nekkar (formerly know as TTS Group) in the past months. Currently the company is undergoing a major transformation as they have sold the majority of their former business to Cargotech, returned 4 NOK per share to equity holders (~55% of enterprise value), acquired Intellilift, changed name from TTS Group to Nekkar, and are now building a more diversified company from the ground.

The company is a micro cap with a total capitalisation of approximately 300 million NOK (~ 30 MUSD) and there is, in my opinion, a lot of uncertainty in their future business areas. Usually I buy solid companies with increasing dividends and a strong track-record, but this company does not tick the boxes in my dividend growth investment strategy. So, why did I buy into this company? In short, the company holds ~3 NOK per share in cash and the stock trades at 3 NOK. Basically, you get Syncrolift for free and access to their other business areas, even though I would argue that only focusing on the highly profitable company, Syncrolift, would be the best way going forward.

I’ll shortly go through the company’s business areas before looking at the financials.

Three business areas

Syncrolift – supplier of ship-handling solutions for shipyards. This is the gem in their portfolio, with stabile margins, 75% market share worldwide, upfront payments by customers totalling 2NOK per share and a all time high order backlog. The company operates in a highly cyclical industry, but the order backlog will ensure that the company is operational and recording revenues until end of 2022.

New Business Areas:

The new business areas will probably be given the most attention from the management in the upcoming years. Some segments will be financed by the profit and float from Syncrolift, but if Nekkar decides to aggressively pursue opportunities in these segments I do believe that the company will have to raise capital, and then most probable through the equity markets.

Aquaculture – this segment may be a drain on the company’s cash flow going forward, since they will be developing solutions for closed cage salmon farming. Their concept is developed in close cooperation with one of the industry’s largest, most successful and reputable companies but they have not yet disclosed the name of their partner.

Currently, this segment does not have any earnings to report and the info on their site is full of popular buzzwords such as “sustainable solutions”, “circular economy” and “digitalization”.

Digital: Intellilift – a 51% share was acquired in Q2 2019. Intellilift is a software company which develops control systems, data software and visualization tools for remote operations in the offshore energy business. The company is cash break-even on a running basis, but it is not showing positive earnings. Examples of present customers are top-tier end customers like AkerBP (drilling operations) and Ørsted (offshore wind).

Offshore Energy & Renewables – from their company presentation at the Pareto Conference on they have listed this as a new business area. Due to the net cash position, I believe the next acquisition by Nekkar will be in this segment. 100 million NOK is at the parent company level, which doesn’t present a opportunity to make a major purchase.


I will only focus on the continued business, as the discontinued business is no longer relevant for the company. To review the Q2 – report there will be a lot of factors that disturbs the comparisons with previous periods (changes to IFRS 15 / 16, acquisitions and discontinued business). To explain all changes would be very messy, hence only focusing on status quo and Nekkar going forward will give you enough information to make an investment decision.

The profitable part of Nekkar has a solid platform with good margins and the possibility to grow in the aftersales market (services and upgrades). We see that the other segments does not contribute to an increasing EPS for the company at the moment and I’m hoping that the company will limit its acquisitions going forward, focus on Syncrolift and distribute remaining cash to shareholders. Though, I do not expect this to happen – especially not in the short run.

Source: Interim report Q2 – Nekkar ASA
Source: Interim report Q2 – Nekkar ASA

I finish this write-up with an exctract from the write-up by Focused Compounding “The company (Syncrolift) has a backlog that should keep them busy for the next 3-4 years. Some of that backlog is paid for in cash up front. So, here we had a company trading for less than net cash (though some of the cash was unearned revenue – also known as “float” – provided by customers) with no further needs for capital. Since Syncrolift is paid partially up front and has very little need for PP&E and things like that it would normally have negative invested capital in the business. This means that if Syncrolift were to grow revenue, earnings, free cash flow, etc. by about 6% a year – which is about what it probably has done over the last 25 years – it would be able to pay shareholders a dividend of literally everything it reported in earnings and that dividend would also increase at 6% a year. That’s the beauty of a business with no need for additional capital as it grows. As a shareholder, you get to have your cake and eat it too. Cake here being “free cash flow”

Transaction costs are a frequent discussion point among retail investors and I will in this post explain some of the hidden transactions costs that most retail investors forget and why, as a dividend investor, it is important to keep costs at a minimum.

The ordinary brokerage fee is easy to calculate and is often a minimum fee or a percentage of the transaction.

Do you have an overview of the price of the products in your shopping cart?

One of the costs that are easy to forget is the cost arising from the “Bid/Ask – spread”. For the most liquid stocks, the bid/ask-spread can be extremely small, but for the more illiquid stocks the cost will have a greater impact on your return. Let’s say you consider purchasing Equinor ASA, which is a quite liquid stock. The shares last recorded price is NOK 150. The current ASK-price in the market is NOK 151, while the current BID-price is NOK 149. To purchase the stock you have to pay NOK 151 and you will incur a transaction cost immediately of NOK 1, or ~0.6 %. If you decide to sell your shares in the future you’ll once more pay this bid/ask-cost. The power of dividend investing stems from reinvesting your dividends. The effect of interest compounding goes down due to this liquidity cost and is also one of the cons of dividend investing.

Have you ever made an currency exchange at an airport? If you have, you know the bank screws you over big time. Brokers also knows how to milk their customers when it comes to currency exchanges. When purchasing stocks in foreign currencies they charge you a currency mark-up. This foreign exchange transaction cost will often be as large or larger than the ordinary brokerage fee! For stocks that doesn’t distribute dividends to their shareholders this will mostly be a one-time transaction fee, but for dividend investors this fee will be “charged” every time you receive a dividend. The mark-up ranges from 0.075% to 0.25% per transaction. Every time you receive a dividend, your broker can record an income in their books.

So, even though the most quoted transaction costs is the ordinary brokerage fee, this is not the cost that you should pay to much attention to. It is the liquidity cost (bid/ask spread) and the currency mark-up by your broker that robs you in the long run!

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An introduction to my investment journal has now been uploaded. Here you can track all my investment decisions!

If you want to be updated on a periodic basis, feel free to submit your email below:

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If you do not have an exit plan for your investments, you are not alone. Setting some guidelines and improving your selling decisions will increase your returns and reduce the risk in your portfolio. In part 1 I explained my investment strategy and in part 2 I elaborated on some of the errors most investors do after they have purchased a stock. In this part I will give you some of the rational reasons for when to sell a stock.

You purchase a stock and are happy about the company and its prospects, but suddenly the stock doesn’t act according to your plans. The share price rises quickly and beyond the levels you even thought possible in the short-term or the price plummets and you are in the red even before you are able to check whether the shares are recorded in your portfolio. A recent study may have found the reason why active portfolio management underperforms the general market and why most investors are better off investing in index funds. In some cases, the investors are better off by selling their holdings completely at random even if they are the best stock picker out there.

To be honest, I have made some mistakes over the years when I have decided to sell a stock, but I have also avoided some even bigger mistakes. I have missed out on great profits when I have tried to scalp or day trade a stock, only to see the share price keep on going upwards (remember part 2 and the part about anchoring?). On the other hand, I’m not afraid to realise a loss, which have saved me several times.

What I have learned is that in the cases where I sold a stock (only to see the share price increase subsequently) I had an unrealised profit; the company showed no sign that they had lost their competitive advantage and I felt greedy!

In the cases where I ended up realising a loss, I did not do my initial homework, the company had a high dividend yield (which was not sustainable in the long run) and the company sliced its dividend.

Keeping in mind the research article earlier it is important to have some rules for when to sell a company. Even though you follow a buy-and-hold strategy you must maintain your portfolio and keep the weeds out.

Introducing “The Sell Checklist”

First off, the number one rule for a dividend investor is to sell a stock that reduces its dividend.

The Sell Checklist

If a stock you own reduces its dividend, it is paying you less over time instead of more. This is the opposite of what should happen. You must admit that the business has lost its competitive advantage and reinvest the proceeds of the sale into a more stable business. For a dividend growth investor, one should also consider getting rid of stocks that are not increasing its dividends since this may be a signal from the company that their business has stagnated, the competition has increased or that their dividend level is not sustainable in the long run.

Another reason to sell is when buying the stock was a mistake in the first place or there are alternative investment opportunities with better prospects than your worst performing stock. You must trim the dead weight in your portfolio because it will drag the performance of your overall portfolio down.

Diversification and position sizes

In my portfolio a company cannot constitute more than 10 % of total holdings. The reason for this is because 90% of the benefits of diversification come from owning just 12 to 18 stocks. For a dividend investor one should also take into consideration how exposed your total portfolio is to a dividend cut or dividend reduction by a company. If a large share of your total dividend income is paid out by one company, you become highly dependent on that the company doesn’t slice its dividend. Another positive side effect of setting targets for how much a company can weigh in your portfolio is the positive effects that comes from rebalancing (remember the study mentioned earlier?). Negative effects of incorrect position sizes are that you increase personal errors, violate your own rules and make quick and irrational decisions due to the strong influence (bias) you have from the size of the position.


Increased volatility is a signal that the company is not as stable as previously and might be an early sign that the future earnings and dividends are not as safe as it used to be.  


Once again, investors are greedy, and they overreact to good news. If a stock has reached a silly and unsustainable price it may be a rational decision to reduce your position size or sell completely.

Investment journal: If you in retrospect are unable to tell what went wrong, you will most probably not make a profit in the long term. After some time, you will most likely have forgotten why you decided to part with a stock and the reasoning behind your choice. Therefore, in my opinion, it is important to keep an investment journal where you enter your initial purchase decision, cost price, dates and your sell decision. Hopefully you will not make the same mistake again…  

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In part 1 I wrote about the importance of having an investment strategy and I explained the reasoning behind my own investment strategy, and I gave a step-by-step guide on how my investment process was. In this part I will write more about what happens after the decision to purchase a stock has been made and the wild emotional ride that follows.

I state that, besides not having a well-defined investment strategy, the error most investors do when they decide to invest in the stock market is to not reflect upon the length of the holding period. What do I mean about the “holding period” and what is “the length of the holding period”? A holding period, in short, is the time from you buy the stock until you sell the stock. As for the second question I have no exact number of days, but I will try to explain my reasoning for why private investors tend to have a too short holding period. At the end you will find my checklist I use for my companies during the holding period. In part 1 you can find my checklist for the investment decision.    

For long-term investors the focus should not be on reported earnings the next quarter, daily news in the financial press or the everyday market fluctuations, but on the long-term value creation of the company. Private investors tend to not focus on how the company develops in the long run and in return they receive returns, which on average, are below market returns.

To become a long-term investor, and to focus on the aspects which you can control, you must control your mindset and have discipline to follow your investment strategy. If not, you are bound to make the wrong short-term decisions that probably will hurt your long-term returns. By experience I know that the mindset is the hardest to improve for most investors and I have fallen in most of the behavioural pitfalls there is (and I’m pretty sure that I will do some of the same mistakes again). The field of behavioural economics tries to explain how humans make decisions and that people are irrational. I’ve listed two books which I’m currently reading from two psychologist that have won the Nobel Memorial Price in Economics on my book list. (list opp Kahneman og Thaler).

So, what are the common mistakes that investors do and how can you avoid them?

Anchoring: What investors tend to do is to anchor their decision to the price they purchased the stock (the anchoring effect). This fallacy of the mind misleads you from making good investment decisions. Have you heard the saying; “when in trouble, double”? This is an action that stems directly from your initial position being deep in the red and instead of closing the position you choose to add on your position in order to lower your average cost price.      

Tips: View your initial cost price as a sunk cost. You can’t force the direction of the share price and hence it should not be part of your decision. Get rid of positions that makes you act irrational.

Fear: Investors overreact. Period. Emotions causes irrational behaviour and investors today has all the «help» in the world to overreact to news through their mobile phones and other electronic devices. Acting based on fear reduces your average holding period and destroy your potential stock returns!

Tips: Do not act based on headlines in the newspaper, forums or your neighbour telling you to get out of the stock market. It’s probably too late to act on the news and you miss out on the upside when the market is about to recover.

Greed: Investors doesn’t only overreact to bad news. Investors extrapolate the given data they have at hand into the future, which in turn may lead to biased estimates. This recency bias may lure you into taking on more risk than you should and may trick you into “get rich quick”-schemes, e.g. penny stocks or wildly overpriced stocks. If you are aware and recognise the greed in human nature you have come a long way.   

Tips: Do not buy volatile penny stocks and don’t be lured into investments based on lofty prospects. Buy high quality companies with proven track record.

So, what do I do? In the holding period I try to act as rational as possible, keep the number of transactions to a minimum and focus on the long-term prospects of a company. In an ideal world the initial work you put into the initial investment process was enough for you to “forget” about your position and move on to the next one. I’ve come to realise that I cannot force myself to forget about the stocks in my portfolio, hence I try to add to my knowledge about the company, its’ industry etc. and make rational decision based on the new information. I ensure that I check off all the five objects in “The Holding Period Checklist” for every investment I make, and I keep an eye out for any red flags in my companies.  

This concludes part 2 of the blog series and part 3 will be published next week. If you would like to get an update when the next part is uploaded, please subscribe below.

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The investment decision

I will in this blog post series explain my investment strategy and give a step-by-step guide on how I apply my set of rules to the investment decisions that I make. Without a strategy most investors will follow their gut feeling, advice from other people or news in the financial press when investing and will therefore receive below average stock market returns. Every active private investor should therefore, in my opinion, write down their own investment strategy on a piece of paper and define who they are in the financial markets. The strategy that I follow is a blend of dividend growth investing, investing in spinoffs and investing in megatrends. This way will not suite everyone, and should not serve as an investment advice, but hopefully inspire and be a help on the way to increase returns and boost the interest in stocks. At the end of part 1, you’ll find my investment checklist…

Nordic Focus: I have a Nordic focus in my portfolio since the Nordic countries are a very exciting investment universe with solid international companies, which has resulted in high value creation over time. This focus does not exclude investments in companies listed on other stock exchanges since I do not want to constrain myself too much. 

Megatrends: To manage high valuation of assets, one can take advantage of thematic investments that benefit from long-term societal trends. Since it is expected that such investments will not depend so much on the daily ups and downs of the financial markets but try to take advantage of the predictability and sustainability of multi-year trends.

Step 1: Top-down approach

I begin with identifying macro trends and thematic investments (a top-down approach) and I ask myself the following questions:

  • What changes is the world undergoing?
  • What does this mean for different sectors?
  • Which stocks are relevant in the most popular sectors?

Step 2: The quantitative assessment

A quantitative assessment of the company is performed, and I simultaneously fill in my investment checklist. The checklist is my tool to control myself and my way of controlling that I’m true to my investment strategy. There is no reason to own a mediocre business when you can own a high-quality business that have a proven long-term record of stability, growth, and profitability. The quantitative assesment is based on five criteria:

  • Quality
  • Profitability
  • Dividend
  • Valuation
  • Other

A company does not have to tick all the boxes, but the checklist will, in my opinion, increase the probability that the investment will turn out to be profitable and reduce the subjectivity of an investment.

“Part 2 – The Holding Period” will be published next week. Subsribe below if you want to receive a mail when this is published.

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The goal is to become a full-time private investor. To achieve this I will create several income streams, where dividend income makes up the majority.

Why do I want to become a full-time investor?

The short answer is that this is my version of Financial Independence, Retire Early (FIRE). If I was to retire early I would grow bored real fast, get fat or be hard to live with. But, there are no chance that I will work until the retirement age, which in Norway is 67. The retirement age is expected to increase and is already higher in other Nordic countries.

To achieve my goal I’m depending on a high savings rate, increasing my active income, developing passive income and investing to compound my assets.

In numbers: Goal of 10 million Norwegian Krones in free capital (not including my real estate where i live).

With a dividend yield of approximately 4%, this will give me an annual dividend income of 400.000,- NOK.

My savings rate is around 50%, but will increase as my income increases. Next year I’m aiming for 55% and 60% in 2021.

In the stock market my goal is to achieve a annual return of 10%. I’m not disappointed if my return one year is 10% and the general stock market is up 15%, but I will be disappointed if my return is only 5% and the stock market is down 5%. The reason why is because compounding relative outperformance to the stock market doesn’t make you wealthy if the return is low or negative. To read how I will achieve this annual return, see the post «The investment strategy – part 1». In short, I’ll exploit special situations and the power of dividend growth investing.